On January 28, Congress president Rahul Gandhi announced the party is “committed to a Minimum Income Guarantee for every poor person”.
His brief announcement, raised more questions than answers. The financial scale of a scheme that gives a monthly income to the poor in India will be huge. Therefore, how will it be funded? If the programme is funded by, as the Economic Survey had suggested, axing existing welfare programmes, the State’s developmental role will suffer.
There is also the risk of competitive populism as other political parties and states follow suit, with a progressive hollowing of the State if they redirect funds to their income support programmes.
Trying to understand what the Congress is planning, Scroll.in contacted former Finance Minister P Chidambaram, who is said to be leading the party’s thinking on income support schemes.
Excerpts from an email interview.
Could you give us a brief introduction to the proposed scheme: Who will be covered? What will be the quantum of the benefit?
The scheme will cover the poor households, both rural and urban. The idea is to ensure that every poor household has a basic minimum income. If the household has its own income (as it is bound to have), the scheme will provide the difference. We cannot indicate at this stage the amount of money that will be spent.
How will the beneficiaries be identified?
We have the SECC [Socio-Economic Caste Census] data. There are other databases. Once the criteria to identify poor households are established, we will use the data to identify the beneficiary households. The state governments will be fully involved.
There is some chatter that the proposed programme will be a “progressive” income scheme – the amount will vary according to the income of the beneficiary. Is this something you are considering? If so, how will this work?
That is correct. The scheme will provide the difference between the current income of the household (which is inadequate and hence it is a poor household) and the level of basic minimum income. In that sense it is progressive. Besides, we may start with the poorest households and move up to cover all the poor households.
What is the budgetary outlay for such a scheme?
At this stage, I will say that we can find the resources and accommodate the scheme within the Budget.
How will you fund this programme? Will it be funded by hiking taxes or removing existing subsidies?
The scheme will be funded by resources that we are confident we can find. Given the size of our GDP [gross domestic product] and the size of the annual budgeted expenditure, we are confident that funding will not be a problem. Besides, the scheme will be rolled out as the states come on board with the verified list of beneficiaries in that state.
In 2004, the Congress-led United Progressive Alliance came up with the National Rural Employment Guarantee Act as a way of creating a social safety net. In 2019, we are talking about an almost-universal basic income. Are these part of the same vision or has the party changed its thinking on welfare delivery?
MGNREGA [Mahatma Gandhi National Rural Employment Guarantee Act] had a limited objective – to stave off hunger. The minimum income scheme has a larger objective – to wipe out abject poverty. We have not proposed a universal basic income scheme. We have proposed a minimum income guarantee scheme for the poor.
How did the Congress zero in on income transfers as an instrument for poverty reduction? Which studies/schemes is the party basing its thinking on?
There are numerous studies that have established that income transfer is more beneficial and more efficient than other schemes intended to alleviate poverty. Income transfer also respects the autonomy of the beneficiary.
There is a concern that such schemes are vulnerable to competitive populism – with parties promising ever larger payments if voted to power. Your comments on this, please.
The Congress is not engaged in any populist game. We think the time has come to make a final assault on abject poverty. We lifted 14 crore people out of poverty during 2004-2014. We have moved into the next stage of the battle against poverty.